Focus Media (Minutes): Benefiting from the food delivery war, a peak in advertising is expected before the Spring Festival
The following is compiled by Dolphin Research regarding$Focus Media(002027.SZ) the Q2 and H1 2025 earnings call minutes. For earnings interpretation, please refer to《Focus: Short-term Pressure is Not a Big Issue, New Stories are on the Way》
I. Review of Core Financial Information:
1. Comprehensive Performance in the First Half
Total Revenue: RMB 6.112 billion, an increase of 2.43% year-on-year.
Net Profit: Net profit attributable to shareholders of the listed company was RMB 2.665 billion, an increase of 6.87% year-on-year; net profit excluding non-recurring items was RMB 2.465 billion, an increase of 12.17% year-on-year.
Cash Flow: Net cash inflow from operating activities was RMB 3.402 billion, an increase of 15.56% year-on-year, mainly due to increased advertising payments.
Capital Reserves: As of June 30, 2025, the total amount of monetary funds, bank wealth management, and large certificates of deposit was RMB 11.38 billion, an increase of 24.25% compared to the end of 2024.
Dividend Financing: The interim report proposes a cash dividend of RMB 1 per 10 shares, totaling RMB 1.44 billion.The average dividend rate over the past three years has exceeded 100%, and a stable dividend policy will continue in the future.
2. Media Resources and Locations
The number of elevator LCD screen locations continues to increase, expanding coverage.
Poster frame locations are continuously optimized, with some inefficient locations being replaced or eliminated.
Overall, single-point rent has slightly decreased, continuing the trend of recent years.
II. Detailed Content of the Earnings Call
2.1, Key Information from Executive Statements
(1) Comprehensive Performance
Overall advertising demand is stable,with no signs of a full recovery,but some industries are performing well.Instant retail has become an advertising growth area, expected to reach a peak before the Spring Festival.
Industries Performing Well: Internet, cosmetics, food (rice, flour, grain, and oil), appliances, herbal drinks, electrolyte water, electric vehicles.
Industries Under Pressure: Automobiles, dairy products, alcoholic beverages.
(2) Strategic Direction and Innovative Initiatives
Advertising Model Upgrade: Enhancing advertising interactivity through "Tap to Interact," achieving a closed loop of "advertising + rights + conversion." Advertising is upgraded from "broad announcement" to "precise matching," enabling personalized rights distribution.
AI Empowerment:Advertising production efficiency has improved, with AI covering 90% of the production process.Small and medium-sized clients can use AI for ad copy generation and self-service placement, reducing costs and improving conversion. Large clients focus on solution capabilities, with AI leveraging industry experience to enhance service levels.
Acquisition and Integration of New Wave: Focus Media and New Wave complement each other in client structure, building coverage, smart screen layout, and post-link data.After the merger, it will connect with e-commerce post-links like JD, Tmall, and Douyin to enhance advertising effectiveness.
(3) Overseas Market Expansion
Currently covering 11 countries and regions abroad, with approximately 180,000 locations, mainly video media. South Korea and Singapore are profitable, and the scale of locations in some Southeast Asian countries is expanding. Future plans include expanding into Brazil, Mexico, and Canada. Overseas development path: localization, partner collaboration, management team export.
(4) Talent and Organizational Development
The organization is transitioning from a traditional sales model to a "sales + solutions + services" triple team. Recruitment of industry experts and consulting background talents is being strengthened to enhance industry understanding and solution capabilities. Overseas executive incentives use equity mechanisms to enhance entrepreneurial spirit. Domestically, emphasis is on youth in the talent pipeline, expanding recruitment of international students and foreign talents.
(5) Cost and Operational Efficiency
Overall rent is decreasing, with an increase in LCD locations.Future efforts will continue to optimize inefficient locations and control costs.
(6) Shareholder Returns and Capital Strategy
Emphasizing stable cash dividend returns and valuing shareholder value creation. Financial health will be maintained through operating cash flow and capital market operations.
2.2, Q&A Analyst Questions and Answers
Q: Can you share the advertising demand in the first half of this year, and which industries are performing well?
A: Overall advertising demand is stable, with no large-scale recovery. As the market improves and the stock market recovers, industries like catering may drive some conversion. The stock market positively impacts consumer confidence. Industries performing well include:
Internet (showing some growth);
Cosmetics (significant growth after integration with e-commerce platforms, online and offline resonance);
Food (growth in rice, flour, grain, and oil, with representative brands like Jinlongyu and Luhua increasing investment);
Appliances (benefiting from policy subsidies, with increased investment from Hisense and Gree);
Electric vehicles (significant investment from Ninebot);
Beverages (growth in herbal drinks and electrolyte water, with increased investment from Yuanqi Forest and Lulu).
Industries under pressure include automobiles, dairy products, and alcoholic beverages.
Q: As instant retail becomes a new growth point, what is the landscape, and what is your view on budget sustainability?
A:Investment in instant retail continues to increase, not a short-term event, and will change consumer habits,with 30-minute delivery becoming infrastructure, promoting impulse consumption and convenient living.Expected to reach the first peak of investment before the Spring Festival,with major manufacturers actively investing, and future efforts depending on market evolution. The company benefits significantly, as instant retail delivery is mainly concentrated in apartment and office building scenarios, highly aligned with advertising locations.
Q: Can you introduce the background, cooperation opportunities, and significance of the "Tap to Interact" project?
A: "Tap to Interact" is an upgrade from the early Qcard, addressing issues like card loss, high SMS costs, and limited coupons. The new solution uses NFC for seamless interaction, allowing coupons to be directly received and used on Alipay, consumable both online and offline, with stronger precise coupon distribution capabilities.
For consumers, it means "ads are not watched in vain, elevators are not waited in vain," reducing consumption costs. For the company, it is both an advertising upgrade tool and a means to retain impulse purchase anchors for consumers, enabling precise reach for personalized interactions.
Q: What is the current installation progress of "Tap to Interact" devices, and what are the targets for the end of the year and next year?
A:Currently, 287,000 coils have been installed for poster media, and 201,000 devices for electronic screen media. From September to December 2025, the reserve capacity is expected to be 200,000 units per month, prioritizing electronic screens and commercial buildings. The year-end installation target is 1.05 million units, with 2 million units covered next year.
Q: Are there any customer case data for "Tap to Interact" that can be shared?
A:Currently, the highest DAU reaches 500,000, with 1 million daily interactions. The user group is younger, with 50% aged 25-39, and about 28% under 25.A total of 66 brands have participated, with 22 pending launch. Test data shows that the conversion rate for beauty and skincare samples entering stores is 20-30%, with a full-link conversion rate of 8%; platform conversion rate is 15-20%, with higher per-customer transaction value; life service entry conversion efficiency is high, with significant cost advantages; over 1 million coupons are issued daily, with a conversion rate of 10.5%-17%.
Q: Who are the main advertisers for "Tap to Interact" at the current stage, and who is increasing their investment?
A: Mainly includes beauty (positive feedback from sampling, with a store conversion rate of 25-30%), platforms (conversion rate of 15-20%, significant new customer acquisition), takeout (such as beer instant retail delivery), and life services (high interactivity like ride-hailing).Currently, over 1 million rights are issued daily, with an installed base of 480,000 units, targeting 1.05 million units by year-end and 2 million units next year.
Q: What changes are there in the internal structure of advertisers in major consumer categories, and which tracks have significant potential?
A: Internet, cosmetics, and food (rice, flour, grain, and oil) are performing well; alcoholic beverages and dairy products are under pressure. Potential tracks include the second-hand economy, gaming (entry through item distribution), home building materials, outdoor sports apparel, emotional/loneliness/single/silver economy, and financial insurance.
Q: How can the value of New Wave locations be enhanced?
A:Focus Media and New Wave have complementary customer bases, with Focus covering large and medium clients, and New Wave leaning towards small and medium clients.Combined, they can achieve larger screen coverage in third- and fourth-tier cities and optimize services using each other's post-link resources (Tmall, Douyin, JD, etc.). In the future, "Tap to Interact" will also empower New Wave locations, enhancing publication rates and precision.
Q: What is the progress of overseas expansion?
A: Currently covering 11 countries and regions, with 180,000 locations, mainly video-based. South Korea and Singapore are profitable, while other regions are still in the investment phase. Future plans include expanding into Brazil, Mexico, and Canada. Overseas development requires adherence to localization, finding partners, and exporting management teams.
Q: What impact does the "Tap to Interact" project have on pricing models and single-screen revenue?
A: Traditional advertising continues to be priced based on brand CPM, combined with post-link proof of sales conversion;"Tap to Interact" advertising will gradually attempt separate charges after the National Day,but prices will remain lower than other platforms, offering more benefits to both clients and consumers.
Q: What interactive creativity will be introduced after the normalization of red envelope incentives?
A: Interactive ads will be launched, such as changes in ad visuals or different story progressions after "Tap to Interact," enhancing user experience and engagement.
Q: What impact does the application of AI advertising have on traditional media like elevator ads?
A: AI has significantly reduced advertising production costs, enhancing the placement capabilities of small and medium clients, supporting rapid generation of ad copy, images, and videos, and achieving instant feedback with "Tap to Interact." For large clients, AI helps accumulate and output advertising experience, enhancing value-added services.
Q: What is the timeline for the acquisition of New Wave?
A: A shareholders' meeting has been held to approve related proposals, and subsequent submissions will be made to exchanges and regulatory authorities for review, with the timeline uncertain.
Q: What is the progress of AI applications across business lines?
A: AI-generated content (AIGC) has been introduced in 90% of advertising production stages, significantly improving production efficiency. AI data analysis is also advancing. For small and medium clients, about 80% have used AI to generate ad copy, with a 275% year-on-year increase in material downloads. Other applications include AI recognition, IT maintenance replacement, and AI-assisted R&D.
Q: What is the shareholder return plan?
A: Stable dividends will continue, with an average dividend rate exceeding 100% over the past three years. The interim report proposes a cash dividend of RMB 1 per 10 shares, totaling RMB 1.44 billion.
Q: What is the future trend of location costs?
A: Overall rent slightly decreased in the first half, with an increase in LCD locations and a decrease in frame types. The trend of declining single-point rent is expected to continue, with optimization of inefficient locations.
Q: What are the plans for talent development?
A: The future team will transition from a single sales model to a "sales + solutions + services" model, strengthening the introduction of industry experts. In overseas markets, high-end talent is attracted through equity incentives, while domestically, emphasis is on youth in the talent pipeline, and international talent recruitment is strengthened, including international students and foreign management personnel.
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